Us, Japan Face Off At Wto In Film Trade Row

They were speaking before a meeting of the WTO's Dispute Settlement Body (DSB) to hear a US request for creation of a panel to rule whether Japanese policies and sales practices favour domestic producers on the home market for photo film. I am confident we will win this case. As we see it, the US side has no evidence to prove discrimination, said William Barringer, a Washington trade lawyer acting in the case for the Japanese photo group Fuji.

Japanese trade envoys, speaking separately, said that although they expected the case to run the full length of the WTO's dispute settlement process, taking up to 18 months, they did not foresee a defeat. There are many holes in the US case. Frankly, we wonder why it has been brought, said one Tokyo official who asked not to be identified.

 

The row pits Fuji, which holds around 67 per cent of the Japanese home market for photo-film and paper, against its fellow global giant Eastman Kodak, which has some 70 per cent of its domestic market but only seven to 10 per cent in Japan.

Outside their home markets, the two companies dominate world sales of photo-film and paper with Kodak taking about 36 per cent and Fuji 33 per cent - a balance which has led to the dispute being dubbed the battle of the photo giants. Kodak, which convinced former US trade representative Mickey Kantor earlier this year to bring its complaint to the WTO, argues that moves favouring Fuji have cost it $5.6 billion in lost sales since the mid-1970s in a market worth more than $9 billion.

Supported by the US government, Kodak argues Fuji uses its dominance to compel small shops and stores across Japan to favour its products. But Japanese officials and Fuji, citing comments by former Kodak executives, say the US company's failure to keep a hold on the market after a sales boom from 1981-83 was due to high pricing and poor marketing strategy. They lost out and now they are looking for the US government to help them get back in again through the WTO, said Barringer.

The EU had initially expressed interest in the case but is now standing aloof, apparently unconvinced of the Kodak cause. As part of its own case, Fuji is arguing that European photo-film companies have made more inroads in the Japanese market than the US firm by better marketing.